Nadeem Walayat’s Oraculations

As suggested by a reader, we evaluate here Nadeem Walayat’s commentary on the U.S. stock market since mid-2006. Nadeem Walayat is editor of The Market Oracle, “with 25 years experience in trading and investing.” The Market Oracle presents “in-depth analysis from over 500 experienced analysts on multiple views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction.” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:

Nadeem Walayat focuses on the Dow Jones Industrial Average (DJIA) as representative of the U.S. stock market, offering many specific numerical targets for that index. While DJIA and the S&P 500 Index generally move together, we frequently refer to historical levels of DJIA in grading his forecasts.

We select commentaries for review (from the large article archive) that, based on title, are likely to address the U.S. stock market. We further screen selected commentaries for forecasts specific enough to grade.

Nadeem Walayat has a longer history of forecasts for the FTSE 100. He also provides forecasts for gold, currencies and oil. We do not evaluate any of these other forecasts.

Nadeem Walayat cites a wide range of fundamental, technical (including Elliott wave counts) and economic data to explain his DJIA forecasts and considers a range of forecast horizons in different commentaries.

Nadeem Walayat’s forecast sample size is moderate, as is therefore confidence in the measurement of his accuracy.

Nadeem Walayat sent a request and expressed objections regarding this review via email, as follows (unedited):

On 12/31/11, Nadeem Walayat requested:

I note that you have excerpted many of my articles – http://www.cxoadvisory.com/9681/individual-gurus/nadeem-walayats-oraculations/

Please can you link to the original articles where excerpted.

If you are not willing to do so then please remove.

Response on 12/31/11:

The introductory paragraph of the review links to your list of commentaries. Each item in the table of forecast excerpts has the date of your commentary.

A reader wishing to explore the context of any excerpt could therefore easily navigate to the full commentary via the linked list.

It is going to take time to analyse every call and conclusion but there is a significant observed difference. I am therefore happy for you to leave your suggested ranking as it will act as a good comparison for readers to check reality against.

I see that at the end of your suggested performance there is a prompt to subscribe to your premium content, which explains why you would want to relegate others in favour of promoting your service.

Again, my analysis of your ratings will be quite thorough and present actual charts of what happened against what was forecast so that the readers can make up their own minds as to what are the motives of CXO advisory are, and it would be good to de-construct your own market calls using the same tactics as deployed by yourselves.

I am already enagged in sourcing a list of CXO calls / strategies so that readers can also make a more informed decision with respct to your services, as ever I will ensure my resulting extensive and in-depth reasearch will recieve top search engine billing for “CXO advistory”.

Response on 1/1/12:

Complex forecasts such as the one excerpted from your commentary of 10/18/10 are difficult to grade. The excerpted forecast is:

“The Stock market is heading for an imminent correction which means it may not be able to reach resistance at 11,250 before correcting which targets a trend to 10,700-10,500 by mid November, that I expect to resolve in an uptrend into January 2011 that targets Dow 12,000… Also an interim analysis for 2011 suggests that the Bull run could continue into May/June 2011…”

Grading rationale is as follows:

The meaning of “imminent” is arguable but the elaboration indicates you mean through mid-November. From 10/18/10 through 11/15/10, the lowest daily close is 10,978, well above the correction target range of 10500-10700. The trend is generally up through mid-November, going well above “resistance at 11,250″ during the first half of November. There is weakness during the second half of November, but there are no daily closes below 11000. An ensuing uptrend does take the index to approximately 12,000 by late January 2011, and the uptrend persists for several more months. However, this uptrend peaks 4/29/11, with the market trending down through May and most of June (falling about 7% during 4/29/11-6/15/11). In summary, the complex forecast has parts that prove accurate and parts that prove inaccurate and, hence, a “0” grade.”

See Guru Grades for a snapshot of the accuracy of various experts in predicting the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.

S&P 500 Index

Date

Comments re: Nadeem Walayat via marketoracle.co.uk

5-Day Return

21-Day Return

63-Day Return

254-Day Return

9/6/12

…momentum is clearly strongly behind today’s rally which implies this trend has further to run, which means successive Dow bull market highs are likely to occur this month.

1.9%

2.0%

-1.3%

17.5%

+

6/16/12

…this analysis resolves towards an imminent trend to test and possible break of the recent low of 12,035. How far will the break go ? It could trade all the way down to 11,700, but given that the Dow put in a double top, probability favours a double bottom. The bottom it puts in should be firm enough to propel the Dow towards the upper end of the range…

-2.3%

2.1%

9.0%

22.6%

-

2/21/12

Short-term correction followed by Uptrend to Dow 14,000 by Late April / Early May 2012. …I have already cut my net long exposure to the stock market…to 18%…and will likely continue to cut towards about 12% by late April / Early May as it does look like its going to get a lot tougher for stocks from then onwards…

0.7%

3.0%

-4.9%

9.9%

-

12/1/11

…the probability is even stronger for the Dow to break to new bull market highs during the next few weeks. …my longstanding expectations remain for new bull market highs before the end of this year…

-0.8%

2.6%

10.0%

13.6%

-

8/7/11

The stocks bull market is not over… Therefore I have an on going opportunity to accumulate target stocks and will likely get another bite at the cherry after a bounce and plunge into Sept/Oct…

7.6%

7.1%

12.7%

25.3%

+

7/25/11

…stock market trend continues to support my expectations, with the Dow pending a breakout to a new bull market high by mid August 2011.

-3.8%

-13.1%

-9.1%

1.7%

-

6/13/11

…a stock market low [is] pretty close if not imminent, following which the stock market can be expected to spend several weeks carving out a bottom into late June / early July in the form of a volatile trading range with an upward bias in preparation for the resumption of the bull market towards a new bull market high…I am leaning towards a breakout to new highs taking place during mid August…

0.5%

3.6%

-9.2%

4.5%

-

4/3/11

The big picture is that of the stock market targeting…a new all time high either by very late 2011 or early 2012 i.e. a break of Dow 14,200… Breaking the forecast trend down suggests a short trading range into late April, with the main trend of a rally into late August / Early Sept 2011 in the region of 13,400, followed by a further brief correction into early October before the rally to a new all time Dow high by end 2011 / early 2012…

-0.6%

1.1%

0.5%

4.9%

0

1/24/11

…analysis is concluding towards probability favouring continuation of the trend higher to the Dow 12k target by early Feb, when the market can be expected to…enter into a significant correction that at this point suggests a 10% decline.

-0.4%

1.3%

3.6%

2.1%

0

12/24/10

The larger picture is for the Dow to oscillate…towards a mid January 2011 target of Dow 12,000. …The starting point for 2011 would be for this years percentage move plus 5%, so if the Dow ends the year up 10% then that would convert to a minimum 2011 target of 13,400…a mid Jan peak [is] therefore is expected to resolve in a correction…

1.1%

3.1%

4.5%

-0.6%

-

11/22/10

I still see the stocks indices such as the Dow targeting new all time highs, time wise, I am getting the impression that we could have passed the mid-way point, which suggests a 1 to 1-1/2 years to go before we have a bear market…

-1.4%

5.1%

9.8%

-3.0%

-

11/8/10

The stock market is overbought and IS due a correction, the normal tendency for a market after a breakout is to revisit the breakout point before traveling higher which therefore to me suggests the Dow is targeting a downtrend to at least 11,200 (pending a sell signal). On a positive note, recent stock market strength implies a higher longer term target of 12,500 is possible during January 2011.

-2.1%

0.4%

7.8%

0.5%

+

10/31/10

…the Dow is being held up quite successfully into the U.S. elections, this implies that the subsequent rate of decent could be more swift so as to converge inline with the mid November target of 10,500 and 10,700, another possibility is a later low.

3.3%

1.8%

8.6%

4.5%

-

10/18/10

The Stock market is heading for an imminent correction which means it may not be able to reach resistance at 11,250 before correcting which targets a trend to 10,700-10,500 by mid November, that I expect to resolve in an uptrend into January 2011 that targets Dow 12,000… Also an interim analysis for 2011 suggests that the Bull run could continue into May/June 2011…

0.1%

-0.5%

9.2%

2.1%

0

8/22/10

…the Dow could now trade down into the 10,000 to 10,100 zone…remaining within a tight corrective trading range of between 10,700 and 10,000.

-1.7%

6.3%

12.1%

10.3%

-

7/25/10

The Dow continues to target a trend to 10,700… The trend pattern remains for a corrective trading range in preparation for a blast off towards a 2010 target of 12,000 to 12,500…

1.0%

-5.7%

5.9%

17.0%

0

7/18/10

The stocks bull market remains firmly in stealth mode, the perma flash crashers will emerge once again to warn of an imminent crash as a consequence of the stocks death cross just as the market turns higher.

4.1%

2.0%

9.6%

23.8%

+

7/4/10

We remain in a stocks stealth bull market and the action off of the April 2010 high is correcting the preceding 70% advance, which I expect to ultimately resolve to a new bull market highs this year.

6.5%

9.6%

11.5%

31.6%

+

6/20/10

The current trend continues to firm that the stock market has entered its up swing phase that targets 10,700+ by early July.

-3.5%

-3.9%

1.1%

15.6%

-

6/13/10

…immediate action targets Dow 10,300 Monday which will probably hold the advance for a trend lower to Dow 10k by mid Wednesday…before the market again gears itself up for an attempt to break above Dow 10,300 (should succeed) to target Dow 10,700+…

2.2%

0.5%

1.8%

16.1%

0

6/6/10

The volatile sideways trading range continues with immediate trend targeting a continuation of last Fridays sell off into an early week low, perhaps in the range of 9800 to 9850. Thereafter expectations are for a rally towards the balancing point of the range at 10,350…

3.7%

0.9%

3.8%

21.8%

+

5/23/10

…expectations remain for a…bottom in about 5 to 10 days in the target range of 9,800 to 9,850 within a trading range of 10,900 to 9,800… However the big picture is for this trading range is to eventually resolve to the upside, the forecast expectation is for the Dow to possibly remain stuck in the trading range until mid July…

-0.3%

1.7%

-0.2%

23.0%

+

5/16/10

…analysis concludes towards the stocks bull market under going its most significant and a highly volatile correction since its birth in March 2009… This correction could last for several months and may extend all the way into early October… Expectations remain for the bull market to resume its trend towards a target of between 12k to 12.5k by late 2010

-5.6%

-2.0%

-5.1%

17.9%

0

4/26/10

…we will start to enter the forecast window for a significant top within the next 2 weeks…

-0.8%

-11.4%

-9.0%

11.8%

+

4/11/10

…analysis continues to resolve towards a Major SELL SIGNAL by Mid May 2010 Dow £12k target…

0.1%

-3.4%

-9.9%

9.8%

+

3/23/10

…my specific conclusion is for a continuation of the uptrend into early to mid May, achieving the 12,000 target during this time period, also allowing for a correction during April…

-0.1%

2.9%

-5.2%

11.5%

0

2/28/10

…the immediate trend lower into the anniversary of the bear market low that still overall targets a trend into the original correction zone of 9,500 to 9,800…

2.0%

5.2%

-1.1%

17.3%

-

2/21/10

…we are likely to see a downtrend into the bear market low anniversary time window that straddles 5th and 8th March 2010 that targets a low in the region of between 10,050 and 9,800…entry triggers…should become evident early next week.

0.7%

6.0%

-3.3%

18.0%

-

2/2/10

…the bull market is undergoing a significant correction that targets 9,500 to 9,800… Stocks…will trend Sideways during first half of 2010 attempting to break higher. The second half will see a strong rally to above 12,000 targeting 12,500 during late 2010.

-3.0%

1.8%

9.0%

18.5%

0

12/13/09

…we get the santa rally to a new 2009 high for the Dow into the last few days of December and then the market starts the significant correction…

0.0%

3.1%

4.1%

11.6%

0

12/3/09

…at this point analysis favours the normal correction to materialise which targets 9,950 to 9,900.

0.2%

3.3%

3.5%

11.3%

-

11/21/09

The Dow hit the mid target range of 10,425 and started a ‘normal’ correction that continues to target 9950 to 9900…

0.2%

1.3%

-0.1%

7.5%

-

11/15/09

…traders who are long it would be wise to bank profits, pending outcome of what looks like an imminent correction…

-0.3%

0.0%

-0.9%

7.9%

-

11/2/09

All in all this is suggestive of a downtrend towards 9,400 into Mid November with a year end rally to back above 10,000 targeting a rally high in the region of 10,350 to 10,500 during December.

4.8%

6.4%

5.8%

17.1%

-

10/25/09

…I remain skeptical of the current phase of the stocks bull market rally being sustainable…

-2.3%

3.6%

2.4%

10.9%

-

10/11/09

Look for downtrend to resume…to 8900-9000 zone.

2.0%

1.6%

6.6%

9.1%

-

10/4/09

The trend remains inline with expectations for Dow…to experience a serious correction during October and therefore should continue to trade inside the down trend channel all the way towards…9000…

3.4%

0.5%

8.9%

11.3%

-

9/26/09

BOTH indices gave sell signals, triggering SHORT positions…earlier analysis had penciled in Dow 8900 from Dow 9750…

-2.1%

0.0%

6.0%

7.4%

+

9/7/09

…I continue to march with the bull market and favour [some sideways drift (possible false break lower) before a sharp rally]

2.7%

3.1%

7.9%

8.2%

+

8/24/09

The Price action…suggests a higher target than the original 9750 to 10K before the end of Oct 2009, the secondary stated target was 10,450. However it also suggests that the market may put in an earlier peak. I am still leaning towards the next correction AFTER the peak to be of greater significance than the last correction from June to July.

-0.5%

3.4%

6.8%

2.1%

-

7/23/09

…the stock chart is talking that we are in a stocks bull market, and is suggestive of a trend higher towards a 2009 target of between 9750 and 10,000, with a high probability that we may get there before the end of October!

1.1%

5.1%

11.8%

14.1%

+

7/8/09

The Dow is still projecting towards a target of around 7,500…, JUST AT THE POINT WHERE I EXPECT THE STOCKS STEALTH BULL MARKET TO RESUME!

6.0%

13.4%

18.3%

22.6%

-

6/3/09

…expectations are now for this significant correction to materialise…it is still just a correction against the trend…

0.8%

-3.8%

9.5%

12.7%

+

4/26/09

I would go with a continuation into early May to set up for the main move which is for the significant correction that targets a decline of about 14% or Dow 7,500 from 8750. …the smart money will be positioning for a significant correction…

5.8%

4.1%

14.2%

40.7%

-

3/24/09

…correction IS IMMINENT.

-1.0%

5.7%

10.8%

44.7%

-

3/15/09

We have in all probability seen THE stocks bear market bottom…

9.2%

13.0%

25.5%

54.6%

+

3/8/09

…the secondary overshoot targets a possible trend towards 5,700 to 6000 with a continuing time window targeting mid 2009. The next phase for the stock market forecast for 2009 is for stocks to enter a multi-year bull market amidst prevailing gloom and doom economic data and press headlines that initially targets a 30% rally form the lows into December 2009…

11.4%

20.5%

39.0%

70.0%

0

2/25/09

The anticipated trend is…is for the DJIA to target a rally to resistance of 7,900 and thereafter resumption of the bear trend to below 6000. However my longer term forecast of a multi-year bull run ‘so far’ still stands…

-6.8%

8.9%

19.0%

45.9%

-

2/14/09

…the stocks bear market continues to target DJIA between 6,600 and 6,000 by July 2009. The short-term trend is exhibiting much volatility. Its a tough call but I would not be surprised if stocks closed higher next week…

-2.0%

0.7%

11.9%

40.5%

0

2/8/09

…at this time probability still strongly favors a break lower with a summer bear market target of 6,600…

-9.3%

-17.1%

6.8%

24.0%

0

1/20/09

…I do not know at precisely what price level the Dow will make a low during 2009, my best estimate at this time is 6,600, but I am expecting that it will mark the start of a multi-year bull market that will eventually make 2008-2009’s price action appear as a mere minor blip…

5.0%

-3.3%

3.4%

35.6%

+

10/20/08

…a volatile sideways trend for at least the next 6 months to be followed by an gradual upward curve. In the meantime the credit chaos events will undoubtedly see much volatility that will see several spikes higher and lower in the 10% region, with a high probability that we will see the recent lows breached at least once between now and June 2009.

-11.1%

-10.0%

-15.7%

14.4%

+

7/14/08

The Dow Jones is expected to make an imminent low if it has not already done so. The expected uptrend will be volatile, but targets a move to above 12,100 by September 2008, which represents a move of +1000 from the last close.

2.6%

5.0%

-25.9%

-23.4%

-

3/25/08

…a bounce here into late April / May is highly probable, following that we should see another sharp leg lower during the summer months…

1.3%

2.0%

-2.6%

-38.4%

+

1/23/08

The most probable scenario for the stock markets is for a rally over the next few weeks and then a re-test of the current lows.

1.3%

1.1%

2.8%

-37.5%

+

11/18/07

…the Western markets are still gearing up towards a strong end of year rally.

-0.4%

1.4%

-5.1%

-47.5%

+

11/12/07

…that should be it for this sell off and for the bull market to re-exert itself.

-0.4%

3.3%

-6.3%

-36.7%

-

11/4/07

…the bull market is intact and the current price action is a correction within the trend. Not only that, but the S&P is demonstrating a healthy uptrend i.e. a measured uptrend…

-4.2%

-1.1%

-11.0%

-39.8%

-

10/7/07

…I would view any future sell offs as buying opportunities, this bull market is behaving as though it has just begun rather than having run for over 5 years! It may remind some of pre 1987, but to me it looks more like pre 1995.

-0.2%

-2.1%

-8.8%

-41.4%

-

4/23/07

The scene is being set for the next anticipated stock market tumble to begin sometime over the coming two weeks…

0.1%

2.9%

3.6%

-6.2%

-

3/13/07

…the low of 12,040 will be breached, therefore the Dow Jones is targeting a decline to between 11,650 and 11,750…

2.4%

5.1%

9.5%

-6.5%

-

2/27/07

…the Dow Jones is initially targeting a decline to between 11,650 and 11,725… The timeframe for the downtrend to conclude is by early May 2007.

-0.3%

1.3%

8.3%

-4.9%

-

12/26/06

…I expect a decline to start in January and continue into March 07, several technical indicators suggest the Dow is targeting 11,000 by late March 2007. …this should be followed by a corrective rally into early May 2007. This trend should be followed by a further decline into July 2007. …The presidential cycle should start to reassert itself by forcing the Dow Jones higher…my guess at this time is that the Dow Jones will end 2007 at a new all time high.

0.1%

0.3%

0.0%

3.6%

-

12/16/10

The VIX is warning, that…January and much of early 2007 is likely to see a sharp drop on Share prices…the view that early 2007 will see a sharp drop in share prices is also borne out by MACD indicator…and also the failure of the Dow Jones Transports to confirm the new highs in the Dow Jones Industrials…

-0.4%

0.0%

0.9%

4.4%

-

11/11/06

… instead of stock market gains, we can expect losses, resulting in an aggressive decline… A 50% retracement of the move from the June Lows to recent highs would peg an initial target for the Dow Jones of 11,450…

1.2%

2.1%

5.1%

5.4%

-

10/9/06

The Dow is likely to find the next two weeks tough, and could fall towards support at 11,680, before a run up to the elections…

1.4%

2.4%

4.5%

15.6%

-

7/21/06

The price pattern supports a resumption of the trend to the 11,680 high.

3.1%

4.6%

10.1%

19.5%

+

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